Economic data may push gold down, but it’s not budging easily

The gold price turned downward today as economic data and the prospect for a rate hike are due to be released.

August gold, the now most-active futures contract, lost $5.70, or 0.5%, to settle at $1,265.70/oz. Meanwhile the earlier June gold, down to the second most-active contract, fell $6, or 0.5%, to $1,262.10/oz.

Gold’s movement as of late has been borderline boring, floating in and around the $1,250s. Events that push the gold price in either direction have been relatively moderate and frequent, resulting in repetitive, small adjustments.

“The gold price has been held in a narrowing trading pattern for some while now and [traders] are waiting for some news to come out that prods the gold and silver prices into a strong move,” said Julian Phillips, co-founder of Gold Forecaster in Marketwatch. “A weak dollar is not enough, unless these falls continue.”

On Tuesday, data on U.S. consumer confidence showed a decline in May for the second month in a row, which suggests a negative consensus towards the economy. A second round of economic data is due to be out Thursday and Friday, concerning ADP payrolls (a payroll processing business) and US nonfarm payrolls (doesn’t include farm work, unincorporated self-employment, and employment by private households, the military and intelligence agencies) respectively.

The contents of this data should help determine whether there will be an interest rate change when the Federal Open Market Committee next meet on June 13.

According to CME Group’s FedWatch there is a near 89% chance of another rate hike, but the Federal Reserve has made unexpected decisions before, and surprising data could play a role in swaying any pre-conceived views on the economy.

In mining news Lundin Gold’s shares have declined after an announcement of a $400-450m financing project for its “Fruta Del Norte” (Fruit of the North) project in Ecuador. The share prices spiked a little upon the announcement, owing to the prospect of greater investment. Indeed the private equity groups Orion Mine Finance and Blackstone Tactical Opportunities said the package was a sign of “growing support for mining investment in Ecuador”.

Both equity groups will have all-clear to purchase up to 50% of the gold production from the site, which has a maximum of 2.5m ounces.

The Fruta del Norte project was bought in 2015 from Kinross Gold, a fellow Canadian company, which put the project on hold after a disagreement with local authorities over windfall tax.

Photo Credit: Ken Teegardin www.assistedseniorliving.net (edited)

Link to this article: : http://www.goldmadesimplenews.com/gold/economic-data-may-push-gold-down-but-its-not-budging-easily-13179/

Posted by on May 31 2017. Filed under Gold News, Mining. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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